These have not been fun times to be a gov-ernor.State governments have just started to raisetheir heads above water after one of the worstfiscal crises to hit the state capitals in 20 years.The states were slammed with a perfect stormof bad economic and financial news, explod-ing costs of key services such as health care,and increased demand for expenditures forhomeland security in the wake of the attacksof September 11, 2001. After nearly a decade of prosperity, rising tax receipts, and healthy budget surpluses, the states quickly sank in a sea of red ink during the recession. For exam-ple, in late 2002 the total California statedeficit forecast for fiscal years 2004 and 2005reached a record $35 billion.
The GoldenState’s fiscal crunch, which was caused largely by the ineptitude of then-governor Gray Davis,was the major contributing factor to Davis’sbeing recalled by California voters andreplaced with Arnold Schwarzenegger.Some governors addressed the fiscal melt-down by enacting major tax hikes. Othersenacted belt-tightening measures. In FY03state expenditures adjusted for inflation actu-ally fell for the first time since the early 1980s.
Only in the last nine months have states final-ly begun to see better times ahead.It is in the context of the state fiscal crisisthat we present the results of the CatoInstitute’s seventh biennial fiscal policy reportcard on the nation’s governors.
The study is a comparative analysis of the budget and taxrecords of 42 governors. (Six governors wereexcluded because they assumed office toorecently for their records to be fully assessed.The governors of Alaska and Wyoming wereexcluded for technical reasons.)
The reportcard provides an index of fiscal restraint foreach governor. Governors who cut taxes andspending the most receive the highest grades.Those who raised taxes and spending the mostreceive the lowest grades.
Some governorsaddressed thefiscal meltdownby enactingmajor tax hikes.Others enactedbelt-tighteningmeasures.
Table 1SeniorClass Governors—Overall Grades
GovernorStateScoreGradeBill Owens (R)Colorado77AJudy Martz (R)Montana75AJeb Bush (R)Florida66BGeorge Pataki (R)New York63BJohn Hoeven (R)North Dakota57BGary Locke (D)Washington57BRick Perry (R)Texas55BMichael Easley (D)North Carolina53CDirk Kempthorne (R)Idaho52CTom Vilsack (D)Iowa50CMike Johanns (R)Nebraska49CBob Wise (D)West Virginia43DRuth Ann Minner (D)Delaware42DKenny Guinn (R)Nevada40DMike Huckabee (R)Arkansas37DBob Holden (D)Missouri35FBob Taft (R)Ohio30F